T-Mobile’s expanded network has rivals – and suitors – taking notice
NEW YORK: T-Mobile US Inc has built a reputation as a scrappy underdog by offering cell service with no contracts and cheap prices.
Now it’s aiming for another title: America’s No. 1 wireless carrier.
That might seem a stretch for a cell-phone company long known for its lousy coverage outside of major cities.
But over the past five years T-Mobile has been on a buying binge to extend its reach. Bankrolled by a US$ 3 billion break-up fee from a failed 2011 merger with AT&T Inc, it has snapped up wireless airwaves in states ranging from New York to Washington.
Suddenly, T-Mobile, the No. 3 US wireless carrier, is within striking distance of market leaders Verizon Communications Inc and AT&T, at least when it comes to delivering nationwide coverage.
OpenSignal, a London-based startup that measures network experience based on data from users of its app, said in February that T-Mobile and Verizon were tied in speed rankings in the last quarter of 2016. Testers found a Verizon signal 88 percent of the time; T-Mobile’s network availability was just two percentage points lower.
T-Mobile Chief Technology Officer Neville Ray says the bulk of the country will soon have access to its network.
“There’s nothing that stands between us delivering and matching, if not beating, Verizon and AT&T’s coverage,” Ray said in an interview with Reuters in May.
Verizon and AT&T still maintain a hefty lead when it comes to retail subscribers, each boasting around double T-Mobile’s 55 million users. They also have higher profit margins.
Still, T-Mobile’s client base has been growing steadily. Its share of retail subscribers grew to 18 percent in the first quarter of 2017, up from 10 percent in the same period in 2012, according to data from financial services firm Barclays.
And when it comes to users who pay a monthly bill, the industry’s most valuable customers, T-Mobile has grown that segment for four straight years, while Verizon and AT&T lost monthly subscribers in the first quarter of 2017.
There’s nothing that stands between us delivering and matching, if not beating, Verizon and AT&T’s coverage.
T-Mobile’s German majority owner Deutsche Telekom AG, which owns roughly 65 percent of the U.S. carrier, says T-Mobile is now positioned to call its own shots as it plots its course in the United States.
“We decide what, when, and how,” Deutsche Telekom Chief Executive Tim Hoettges said at an annual shareholder meeting on Wednesday.
That includes T-Mobile remaining a stand-alone carrier. But the real intrigue in telecom circles is about a possible merger or acquisition. Rival Sprint Corp, America’s No. 4 carrier, has expressed interest in a tie-up.
Japan’s SoftBank Group Corp, Sprint’s controlling shareholder, was prepared to give up control to do a deal with T-Mobile, sources familiar with the company’s thinking told Reuters in February.
Cable companies, too, could be interested as they roll out wireless services to bundle more products together. In January, John Malone, whose Liberty Broadband Corp is the largest stakeholder in Charter Communications Inc (CHTR.O), raised the possibility that major cable companies could get together and buy T-Mobile.
The buzz has boosted T-Mobile’s stock price, which is up nearly 60 percent from a year ago. Firstquarter profits hit $ 698 million, or 80 cents per share, up 46 percent from a year earlier and well ahead of analysts’ expectations.
The success of T-Mobile, which has dubbed itself the “Un-carrier,” can be attributed partly to its straight-up approach to mobile. It was the first major carrier to eliminate two-year contracts, a shift quickly embraced by consumers and copied by competitors. The company has continued to badger rivals, most recently with its unlimited data plans.
But copious data and fast speeds are pointless if mobile users can’t get a signal. Verizon, the biggest US wireless carrier by subscribers, says T-Mobile still has a lot of catching up to do.
Chief network officer Nicola Palmer pointed to data from testing firm RootMetrics, which has called Verizon the clear US leader in coverage and reliability.
Some T-Mobile customers, too, say their service isn’t what it should be. Austin, Texas-resident Abbie Scheider, an avid camper, says she’s out of luck in the woods of central Texas.
“I never have service even when others do,” the 24-year-old ad agency account executive said. “It’s frustrating for sure.”
T-Mobile’s big push to boost coverage began in 2012 when it received cash plus spectrum from a failed merger with AT&T.
The US Justice Department in 2011 sued to block the deal on concerns it would harm competition.
Facing the prospect of a lengthy regulatory battle, AT&T walked away. — Reuters
Neville Ray, T-Mobile Chief Technology Officer